The CRTC ruling hurts the CBC -- and viewers

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The CRTC’s move in favour of the big broadcasters opens door for massive fee hikes by cable television firms, which, ironically, are the owners of some of these same companies, and shuts out the CBC. Photo: D. Reichardt/Flickr

On Tuesday, the CRTC made their announcements and decisions concerning the fate of the TV industry in Canada.

The CRTC has relented to the pressure from broadcasters and has decided that they will "allow" a fee-for-carriage charge to be applied to cable or satellite bills to compensate for the services that broadcasters supposedly provide. This means that cable/satellite companies (many of whom own the broadcasters on the other end of the dispute) will have to "reluctantly" charge Canadians for the broadcasts that are created by the likes of CTV and Global.

The translation in cost to consumers: my guess is that it will easily top $1.2 billion as the new fee kicks in. This is based on $10 per month as a new "broadcast tax" per subscriber times an estimate of 10 million subscribers.

The broadcasters that were lobbying for these changes include:

- CTV: owned by Bell Canada (15 per cent)

- Global: no obvious cable/satellite ownership

- A Channel: Parts owned by CTV (Bell) and other parts owned by Rogers

- CHEK News: owned by Canwest Global

Given that most of the clout for the lobbying campaign came from CTV and A Channel, one has to wonder why they were pushing so hard just to break the financial backs of their owners. Canadians need to be very suspicious of the rationale behind this move.

A death blow to public broadcasting?

The exclusion of the CBC from this decision is quite possibly the most interesting element behind this.

For months, the CBC surrendered valuable ad space and moral authority to the private propaganda campaign to pretend that they felt "LocalTVMattered" to Canadians. My guess is that they've offered up at least $20 million in foregone revenue to support the effort, but it's probably much higher than that.

The CBC is left standing at the side of the road, ditched like a prom-date in a torn dress after she's given up "her flower" while the beneficiaries drive off in their limos looking for someone else to con. I'm not about to argue that the CBC should get some of the bounty that the private broadcasters expect to rake in. Instead, they shouldn't have got in bed with them in the first place.

Now that the announcement has been made, the CBC has fewer resources and options than before to earn a decent revenue and push itself away from its dependence on public coffers. The likely alternative is that in light of continuing declines in revenue, and given recent revelations in federal politics, they will be aborted all together from the public payroll.

My suggestion is that the CBC revert to expanding its analog broadcasting services, something that seems inconceivable after making so many investments in digital delivery.

Is the CRTC a relevant institution?

The CRTC's decision seems to have been made in a vacuum. Why? Because Canadians are canceling TV subscriptions.

The percentage of Canadian households with cable/satellite subscriptions has dropped substantially from a peak of roughly 77 per cent in 1999 to less than 65 per cent in 2005. My expectations are that these numbers have dropped even more in recent years. Source: CRTC

The economic impact of today's CRTC decision is simple: increasing the cost of cable/satellite connections will lead to a decrease in demand for those services.

And don't forget that Canadians are watching less TV. This is obvious, given the fact above. However, we recently heard that for the first time EVER Canadians are spending more time online than they are glued to the set. This is substantial. If you have some time, read the comments and you'll see that there's a massive audience that's actually quite mad at Canadian broadcasters, even though the article is just about media consumption.

Canadian media habits are about to change again

In the very near future, expect Canadians to drop cable and satellite in exchange for Internet viewing, but also in favour of services like Zip.ca or other online movie services. Sports junkies will have to find alternatives online as opposed to paying cable fees in the thousands per year. They might as well go to the live events, as they will soon be cheaper.

Alternatively, Canadians will finally start to aggressively bypass Internet Protocol (IP) address tracking and connect directly with services like Hulu, Netflix (which allows movie viewing directly online) and maybe even BitTorrent.

Canada is at a crossroads in its use of television. Our digital infrastructure is antiquated and only a fraction of stimulus spending was allocated towards investment in new technology or new media. The CRTC decision will kill broadcast TV in this country and will generate unprecedented demand for Internet connections as a result of grossly over-inflated cable bills (in exchange for modestly bloated DSL or cable Internet fees).

On the surface, this is good news, especially for those that have the stones to put all of their budget into online marketing.

However, the reality is that we may not be ready for a massive influx of video-hungry, MP3/MP4-downloading media junkies looking for a post-cable fix. We have yet to create an effective broadband fibre plan and the CRTC has blocked Canadians from substantial volumes of international content.

It's also easy to understand why the CRTC announced late last year that they were going to allow the parent companies of the broadcasters to begin imposing penalties and fees for excessive Internet bandwidth consumption. They've set the trap and Canadians are going to fall right into it.

I'm hoping that I'm exhibiting unnecessary anxiety about our feeble media state, but making this announcement without a backup plan for the country seems like jumping into a pool after you've realized that you haven't filled it with water.

Bill Wittur is the Managing Director of Bottree Digital Services, which has been providing digital strategy and online marketing services for more than ten years. Bottree is not aligned with any media company, broadcaster or publisher.

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